Page 204 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 10: Logistics and Distribution

Trend 5 – Shortened and More Complex Product Life Cycles: Today many of our clients are under Notes
pressure to develop innovative products and bring them to market more rapidly, while
minimizing cannibalization of existing products, which are still in high demand. In order to
meet the needs of both customers and consumers, companies need more efficient product lifecycle
management processes. This includes heavy emphasis on managing new product introduction,
product discontinuation, design for manufacturability and leveraging across their entire product
and infrastructure characteristics. One chief benefit of PLM processes and technology is helping
companies design products that can share common operations, components or materials with
other products, thereby reducing risks of obsolescence write-offs, increasing cost leverage on
the purchasing of key materials and ensuring that infrastructure investments are optimally
utilized. Additionally, getting this right will help to improve your time to market. By focusing
product lifecycle management efforts in these areas, a company can buffer itself against the risk
of an unplanned cost increase, a poor new product launch, an unplanned obsolescence write-off
and can enhance the overall customer perception of the company as an effective innovator.
Typically when companies begin the process of introducing new products to market, they
coordinate marketing, engineering, sales and procurement and develop sales forecasts to plan
products in the pipeline. Without a formalized product lifecycle process the end result isn’t
always predictable. Recently, a US-based major appliance manufacturer, struggling with sky-
rocketing product development costs and a cumbersome, manual development process, was
looking to implement a PLM initiative to help reduce the cycle time between development and
entry to market. While implementing a new PLM environment the company designed innovative,
common product development processes and selected a PLM solution to control engineering
document management, online mark-up and web-based collaboration with suppliers and contract
manufacturers. As a result, the company increased parts re-use, improved document retrieval
time, reduced design cycle time, and ultimately reduced new product development cost by 15
percent. These improvements helped the company grow revenue by 25 percent, mainly from an
increased rate of product introductions. As the economy becomes more global, labeling and
compliance to packaging requirements and regulations have become critical to success. Without
adherence to local packaging and labeling regulations a product may violate local requirements,
preventing it from being distributed and sold in that market. Product lifecycle management
technology and processes can help ensure that products being produced and targeted for specific
markets are well-managed and are compliant. Product lifecycle management tools and processes
have helped consumer goods companies with their efforts to try to continually drive demand
through packaging and labeling innovation and design. Implementation of an optimal PLM
process and technology can allow a consumer goods company to effectively produce and
distribute products that are only targeted for regional promotions or consumer preferences.
Trend 6 – Collaboration Between Stakeholders in the Extended Supply Chain: As supply chains
continue to develop and mature, a move toward more intense collaboration between customers
and suppliers has occurred. The level of collaboration goes beyond linking information systems
to fully integrating business processes and organization structures across companies that
comprise the full value chain. The ultimate goal of collaboration is to increase visibility
throughout the value chain in an effort to make better management decisions and to ultimately
decrease value chain costs. With the right tools, processes and organizational structure in place,
collaboration provides key people throughout the value chain with the information needed to
make business-critical decisions with the best available information. Recent examples of
collaboration have emerged in the expansion of Sales and Operations Planning (S&OP) processes
that include upstream and downstream value chain partners as regular participants. S&OP
processes help maintain a well-coordinated and valid, current operating plan in support of
customer demand, a business plan and a strategy. The improved resulting operating plan provides
the management of each partner with a complete picture of forecasted demand, supply capacity,
corresponding financial information with financial implications and allows them to make
informed, critical decisions. Companies that expand the usage of Sales and Operations Planning

LOVELY PROFESSIONAL UNIVERSITY 199